PPACA premiums lower than expected

By BenefitsPro

New analysis from Avalere Health finds premium rates for mid-range or "silver" health insurance plans are falling below Congressional Budget Office estimates, signaling the state exchanges — the key component to President Obama’s health law — is working.

The analysis from the consulting firm comes just as the Obama administration continues to take heat for the law. In a report Wednesday, the Government Accountability Office pointed to challenges in opening the federal exchanges on time. But Avalere said the initial filings are good news for consumers and the administration.

“The initial data suggest that competition in exchanges is working to lower premiums, which will benefit nonsubsidized enrollees and the federal government,” said Caroline Pearson, vice president at Avalere Health.

For their report, Avalere compared CBO estimates for silver plan rates with insurer rate filings for 2014 that were made available this month.

For example, they found premiums for the second-lowest cost silver plans for a 40-year-old nonsmoker will range from a low of $205 in one region in Oregon to a high of $413 in another region in Vermont. CBO previously projected nationwide the average monthly premium for the second-lowest cost silver plan would be $433.

These second-lowest-cost silver premiums will be used to set federal premium subsidies. If premiums are lower than CBO projections, federal costs for per-person subsidies might be lower than expected, thus saving the federal government money, researchers said.

Although researchers said the rates are lower, there’s a catch: Premiums are still higher than what young, healthy people are paying now for comparable coverage.

That’s been an industry concern for a while now. Insurers have been saying the age-rating provision in the health care reform law will raise premiums for young adults.

Avalere Health also warned that lower-than-expected premiums next year could still rise in the next couple years. Avalere compared rate filings for 2014 to CBO estimates for 2016 because Avalere said the CBO hasn’t publicly released an estimate for 2014.

Also a factor? Avalere said some plans could be pricing low next year intentionally just to attract enrollment.

In a separate new analysis, HealthPocket also warned this week that PPACA’s bronze plans— the least expensive plans under the law — have higher out-of-pocket costs for consumers compared to plans in the individual and family insurance market right now.